J.P.Morgan Flag Need For Concession To Promote Takedown Of 20-Year Supply

Ahead of Wednesday’s 20-Year Tsy auction J.P.Morgan note that “since the November auction, 20-Year yields have declined 14bp, and despite the backup in yields over the last few sessions, they remain more than 60bp off their local highs from late October. Along the curve, the 20-Year sector appears substantially rich versus the shape of the curve and the level of yields. Lastly, risk appetite is likely waning into the final days of the year, particularly alongside a deteriorating liquidity backdrop. Thus, we think it should require a further concession for this supply to be digested smoothly.”